Ways to do business in India

Most businesses that really want to thrive in India need to establish their own presence there.

Being 'on the ground' in India will enhance your ability to manage relationships with Indian suppliers and customers, give you access to crucial market intelligence and demonstrate your credibility to potential partners.

But operating in an emerging market can be challenging. Different language, culture, regulatory requirements and less developed infrastructure can make apparently straightforward business functions difficult.

Here are some things you may need to consider if you are thinking about setting up in India.

Where is the best location to base your Indian venture?

India is a highly diverse society - culturally, linguistically, regionally and in terms of its commercial environment. Choosing the right base of operations can make a big difference in terms of the ease of doing business.

You'll need to assess the business environment in the State you are considering operating in. For instance, how business-friendly is the State government? What is the condition of the infrastructure? Is there a good market for the kind (type and quality) of services you need to support your operations? How easy is it to recruit local staff with the skills you need?

Many areas of India's economic strength are clustered regionally (think of software in Bangalore) which might make the choice of location relatively clear. Other factors are more subtle. India has 15 Indian Institutes of Technology, which produce most the country's top engineering graduates. For a company that needs engineering skills, proximity to one of these institutions could make a real difference.

What form should your venture in India take?

In legal terms, your venture in India could be a locally-incorporated company - either a joint venture with an Indian company or a wholly-owned subsidiary - or you could operate as a foreign company by establishing an office in the country.

Locally-incorporated subsidiaries of foreign companies are treated like Indian-owned companies for tax and regulatory purposes and enjoy considerable flexibility in their business activities.

Foreign companies can establish a branch office, a project office or a liaison office in India. Each of these forms allows a foreign company to conduct specific kinds of business (e.g. a project office can be established to carry out a contract secured from an Indian company).

They can be easier to set up and close down than subsidiaries, but they are also more restricted in what they can do and may be treated differently in respect of e.g. tax provisions.

In short there are trade-offs to be made in taking one approach to establishing your venture in India over another, and it pays to take advice.

We offer a full suite of services to help you establish a presence in India. We help our clients with strategic advice, company set-up, business travel, and finding partners and service providers - feel free to contact us at any time